After three prime ministers, three general elections, and Brexit dominating the headlines over the past four years, it comes as little surprise that consumer confidence in the UK has gone through a turbulent period.
However, latest reports indicate confidence in Britain has reached its highest level in over 10 years.
A poll by IHS Market showed that in February 2020, the average UK household’s confidence in their finances and the economy was at its highest point since the survey first started, back in 2009.
In addition, the future household finance index, which measures the public’s perceptions of financial wellbeing, has risen from 49.6 to 52.7 – the first time it has surpassed 50.0 since the 2008 credit crunch.
It’s welcome news for lots of SME businesses, because there’s often a direct correlation between consumer confidence and the amount being spent both on the high street and online.
What does consumer confidence mean?
Consumer confidence is used as an economic indicator, and measures how optimistic consumers feel about their personal financial situation and the economy overall.
When consumer confidence is low, businesses will typically see sales decrease as the public begins to save more and spend less. When consumer confidence increases, it generally leads to a boost in spending, with more disposable income being used on purchases.
Consumer confidence changes frequently, and is measured monthly, quarterly, and annually by market researchers, banks and retailers alike. The figures often follow trends, with confidence remaining low in some financial periods throughout the year, but staying in high in others.
How can my SME business make the most of consumer confidence?
Understanding customer confidence is key to managing your SME. At times of low confidence, it could make sense to plan for fewer sales, but as it begins to rise, you’ll need to be ready to stand out with attractive offers and incentives to boost your business.
Whilst it’s a useful barometer, of course, it’s not the only thing you should use to make important decisions about the future of your business. But, it can be a very useful measure and it’s important to keep an eye on the trends in your sector because businesses that react quickly are the ones that really profit.
What should my business do if consumer confidence is low?
When you’re experiencing low confidence from your customers and the wider economy, there’s no need to panic – or put your growth plans on hold.
Instead of battening down the hatches and waiting for an economic upturn – which could take months, or even years – continuing to expand can mean big benefits for your business.
Whether you’re planning to refurbish your premises or take on new staff, alternative finance can help you press on with your plans regardless of the current business climate.
At Capify, we’ve been raising small business finance since 2008, and are continuing to support new and existing customers’ growth through our flexible and affordable Merchant Cash Advance and Business Loan products.
Our latest whitepaper looks at how to keep growing through uncertainty and features expert commentary from independent research specialist David Black on how business finance can work for you whatever the financial weather.